Richard Eskow Cannot Prove Anti-payday Loans Claims (Pt. 2)

This continues an exploration of Richard Eskow’s Huffington Post article “Usurious Payday Loans: Myths, Flawed Studies, and Solutions.”

Richard Eskow: Do payday loans take advantage of ‘at-risk’ groups?

Richard Eskow attacks an Elliehausen study regarding whether payday loans target “at risk” people, but he does so by simply stating that Elliehausen has published papers that support the payday loans industry. Then he cites papers from the other side that say otherwise. The Elliehausen study sample group is being ridiculed by Eskow for being voluntary rather than random, and Eskow claims that there may be sample bias. Until further exploration as to the motivations of the sample group for participating is conducted, Eskow cannot prove Elliehausen’s study is tainted. As it stands, this reflects a “he said, she said” situation, which provides hardly any proof of his side’s superiority. Again, upon the shoulder of the accuser is where the burden of proof rests. And Richard Eskow isn’t making any headway. Nothing he claims negates any of these finding by Elliehausen:

• About 63 percent of customers are the heads of young families.
• Only 10 percent are 65 or older, indicating that the elderly are not being exploited or targeted as most critics claim.
• Customers generally have “lower and middle incomes”; 41 percent earn $ 25,000 to $ 50,000 each year, while 39 percent make $ 40,000 or more.
• Payday loan customers who make higher incomes (those who earn more than $ 50,000) make up a larger share than those in the lower bracket (of or less than $ 15,000). This contests the idea that the poor and destitute are being “targeted.”
• 90 percent of all customers have a high school diploma or better, while 54 percent have a higher education degree or have attended college.
• General indications are that payday loan customers have limited access to credit, but still make use of payday loans sparingly.
• An astonishing “81 percent of customers recalled receiving information on the annual percentage rate for their loan” and were completely aware of overall costs.
• What’s more interesting is that 86 percent of no fax payday loan customers said the product was a “useful service.”

For good measure, here are some other academic studies that show how payday loans benefit consumers. Please, satisfy the burden of proof, Mr. Eskow. In America, that’s just the way it works.

The demand for payday loans

The sensationalist argument that more payday loans stores have cropped up faster than fast food restaurants since 1990 is all flash without substance. The expansion has very little to do with some diabolical plot and everything to do with filling a need. Banks refuse to loan to any consumer who does not meet their credit requirements. For customers who need short-term credit (like to pay a utility bill to avoid shutoff, or to repair a vehicle to make it to and from work) payday loans call fill in the gap and provide the credit no other place can offer. It’s a means to an end that 94 percent of its customers use in a responsible fashion - 94 percent do not roll over loans, according to long-existent industry materials (such as those of Advance America, Form 10-K, which Meyers suggests that Eskow read).